Fairfield, N.J. August 3, 2018 - Manufacturing Talk Radio host and President of All Metals & Forge Group, Lew Weiss, sits down with Tim Fiore, the Chair of the Institute for Supply Management Manufacturing Business Survey Committee, to dive deep into the Manufacturing ISM® Report On Business® for July 2018.
Weiss and Fiore take a closer look at the latest developments in the world of manufacturing. According to the nation’s supply executives in the latest Manufacturing ISM® Report On Business®, economic activity in the manufacturing sector expanded in July, and the overall economy grew for the 111th consecutive month.
The July PMI registered at 58.1 percent, which is 2.1 percentage points less than in June, but Weiss confirms that it is still a “strong number” because “numbers over 60 are hard to sustain over a long length of time.” Tim Fiore concurred, saying, “If you look at 58.1 on its own, it is a standup number, and one that manufacturers should be proud of.” He continued, “The Supplier Delivery number dropped down to a number that still reflects them struggling, but it is in the low 60’s now rather than the high 60’s, and I would rather see it in that range.”
The Price Index for July was 73.2 percent, decreasing 3.6 percentage points from the month prior, indicating higher raw material prices for the 29th month in a row. While 17 of the 18 manufacturing industries reported growth in July, the Primary Metals industry reported a decrease.
Fiore says that price pressure has continued to stay strong, but the index has softened for the second consecutive month. Demand remains solid, but the country’s employment resources and supply chains are still struggling, adding, “Overall, demand looks to be in pretty good shape, but the falloff points could be attributed to the seasonality issue and the fact that July is an odd month.”
Respondents have become understandably concerned about how tariff-related activity, including reciprocal tariffs, will continue to affect their companies.
According to a respondent in the Electrical Equipment, Appliances, and Components industry, “Steel cost increases are causing a lot of negotiations. The increases are real and will affect costs beginning in the third quarter of 2018.”
A respondent in the Fabricated Metal Products Industry expressed their concern about the effects of the tariffs on steel saying, “We have already seen steel prices increase due to the threat of the tariffs and are seeing kickback from our customers due to the higher prices. We are concerned that the end customer will go to offshore to purchase the finished product.”
Another, in the Primary Metal Industry, similarly said, “Our customer demand is high, but supply of aluminum is tight. Also, tariffs are negatively affecting our bottom line, as we are unable to pass increases to all of our customers. Plus, we are seeing increases in our construction costs because of the steel price increases. Labor market is extremely tight for professional personnel, plant technicians and support associates.”
Companies are now seeing the effects of this so-called trade war and it is taking a toll on their business activity. To hear the full breakdown of the July 2018 Manufacturing ISM® Report On Business®, listen to the most recent episode of Manufacturing Talk Radio at mfgtalkradio.com.
ABOUT MANUFACTURING TALK RADIO & LEW WEISS
Lew Weiss, President of All Metals & Forge Group, has over 45 years of experience in the metals industry as a manufacturer. His co-host, Tim Grady, has more than 25 years of knowledge as a senior strategist and business advisor to companies of all sizes. Manufacturing Talk Radio is a weekly podcast for manufacturers with breaking news and tackles business trends and economic forecasts in manufacturing for small, medium, and large manufacturers across America and around the world. Launched in 2013, MTR posts new episodes every Tuesday at 1:00 p.m. EST and has had over 760,000 downloads over the last 24 months. (As of 6/27/18)